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Just when bond yields looked like they'd reached escape velocity to break free of their range-bound ways and ease into a long-term ascent, they're pulled right back to earth. Specifically, to Cyprus.

In case anyone needed a reminder that global markets remain fragile, interconnected and fraught with unseen perils, last week's surprise revelation of a Cypriot financial crisis, complete with a self-inflicted bank run, served that purpose. A plan to impose a bank-deposit tax (read: seizure) had investors wondering whether other troubled countries couldn't follow suit, and reports that Cyprus could exit from the euro zone rekindled doubts about the monetary union.

After investors spent Monday and Tuesday piling into U.S. bonds and seeing if they could remember where to locate Cyprus on a map, they quickly had to pivot their attention to the Federal Reserve, which concluded its latest policy meeting Wednesday. This meeting wasn't expected to produce much in the way of policy change, but it generated so little that the release of the much-anticipated postmeeting statement—typically a catalyst for some sort of intraday move in Treasury yields—barely created a blip on bond trading charts.

Markets await the first sign of the Fed starting to tap the monetary brakes. It won't touch short-term rates, which remain pinned to the floor, anytime soon, although longer-term rates are more free to fluctuate as markets see fit.

The Fed will ultimately have to say when it plans to scale back or stop its $85 billion monthly bond purchases and what it will do with the bonds it owns. Fed Chairman Ben Bernanke said Wednesday that the Fed is considering varying the pace of those purchases but offered little else that markets hadn't already heard.

The first downshift in the bond-buying program would be a major symbolic move and should weigh on bond prices, possibly sending Treasury yields marching higher in earnest. Treasury yields had been doing a decent job of that on their own lately, especially during stocks' recent winning streak, but last week showed they're not ready to take flight just yet. The 10-year yield ended the week at 1.915%, down from 1.991% a week earlier and a high of 2.087% earlier this month.

Looking at the latest sampling of rate forecasts, Barclays sees Treasuries remaining range-bound amid modest economic improvement, with the 10-year yield falling to 1.8% by the end of this quarter.

Bank of America Merrill Lynch speaks of a "great divergence" between the U.S. and Europe, with U.S. growth accelerating but the euro zone still mired in malaise and blindsided by the occasional crisis. BofA says the Fed's rate guidance, coupled with continued risks from Europe, should keep 10-year rates in a range of 1.75% to 2.25% this year.

Deutsche Bank expects the 10-year yield to rise gradually to 2.35% by the end of this quarter and 2.5% by year's end, on its way eventually to 4% in 2015. Joseph LaVorgna, Deutsche Bank's chief U.S. economist, says he expects sustained labor-market improvement to lead the Fed to taper its bond purchases in the second half of this year.

TREASURIES, OF COURSE, set the tone for pretty much every bond market. If Treasuries do remain range-bound, investors should be able to squeeze a little more out of this long bond bull run, particularly from higher-yielding corporate bonds, before rising rates imperil low-yielding bonds and any true "great rotation" out of bonds commences.

In the meantime, bear in mind that one of the hottest income investments these days is leveraged loans, those bank loans made to speculative-grade companies and then parceled out to investors. Their key feature: floating rates, allowing their payments to fluctuate with prevailing market rates, letting investors earn a modest coupon now and protecting them whenever rates ultimately do turn higher.